Menendez, Colleagues Urge President Trump to Hold China Accountable as the End of Negotiations Approach

Menendez, Colleagues Urge President Trump to Hold China Accountable as the End of Negotiations Approach

“We hope that you will use this final month of negotiations to achieve a deal that makes substantial, verifiable, and enforceable progress to address these concerns”

Wednesday, February 13, 2019

WASHINGTON, D.C. – Today, U.S. Senator Bob Menendez (D-N.J.), a senior member of the Senate Finance Committee that sets trade policy, led Senate colleagues in sending a letter to President Trump urging him to make sure any trade agreement with China adequately addresses China’s predatory intellectual property practices and establishes a monitoring and enforcement mechanism to hold China accountable. The United States Trade Representative found that despite at least eight previous commitments to stop requiring U.S. companies to transfer technology in exchange for access to the Chinese market, China continues to coerce American firms. The letter was also signed by Senators Sheldon Whitehouse (D-R.I.), Mark Warner (D-Va.), Maggie Hassan (D-N.H.), Ben Cardin (D-Md.), Michael Bennet (D-Colo.) and Catherine Cortez Masto (D-Nev.).

“For decades, China has used unfair trade practices to undermine American jobs and innovation. While the United States Trade Representative’s (USTR) Section 301 investigation did not address all the threats unfair Chinese trade practices pose to the U.S., it did identify several serious concerns faced by American workers and businesses,” wrote the Senators.

The Senators sent this letter a day after President Trump suggested he may extend the March 2 deadline for concluding an agreement, and highlighted the importance of committing China to cease the predatory practices identified in the Section 301 investigation, which described four main methods by which China attempts to coerce or steal U.S. intellectual property.

“Your negotiations should seek to extract meaningful commitments from China on each of these elements and end the threats that these policies pose to the U.S. economy and national security,” the Senators added. “A satisfactory agreement must include a clear and transparent monitoring and enforcement mechanism that allows the United States to hold China accountable.”

“Ending those practices is therefore a critical step towards reversing the damage such policies have had on the U.S. economy and restoring balance to the U.S.-China trade relationship. We hope that you will use these final weeks of negotiations to achieve a deal that makes substantial, verifiable, and enforceable progress to address these concerns,” the Senators concluded.

For decades, China has used unfair trade practices to undermine American jobs and innovation. While the United States Trade Representative’s (USTR) Section 301 investigation did not address all the threats unfair Chinese trade practices pose to the U.S., it did identify several serious concerns faced by American workers and businesses. As you approach the final weeks of negotiations with China, we urge you to insist that the deal make substantial, verifiable, and enforceable progress to address the myriad threats identified in USTR’s investigation.

Any acceptable agreement must, at a minimum, commit China to cease the predatory practices identified in the Section 301 investigation. As you noted in your March 22, 2018 Presidential Memorandum, the investigation found four main methods by which China attempts to coerce or steal U.S. intellectual property.[1] First, China uses investment restrictions and licensing procedures to require or pressure technology transfer. Second, China imposes restrictions and intervenes in U.S. firms’ investment and activities, often leading to technology licensing terms that unfairly favor Chinese firms. Third, China directs and facilitates the acquisition of U.S. companies and assets to obtain cutting-edge American technology. And fourth, China orchestrates state-sponsored cyber-theft to gain access to critical U.S. intellectual property. Your negotiations should seek to extract meaningful commitments from China on each of these elements and end the threats that these policies pose to the U.S. economy and national security.

Furthermore, a satisfactory agreement must include a clear and transparent monitoring and enforcement mechanism that allows the United States to hold China accountable. USTR’s Section 301 Report found that despite at least eight previous commitments by China to not use technology transfer as a condition for market access, “China’s technology transfer regime continues, notwithstanding repeated bilateral commitments and government statements.”[2] There is no reason to expect that this time will be different. The only way to hold the Chinese government to its word is to lay out clear metrics by which we can judge compliance.

For too long, China has used the predatory practices described in USTR’s Section 301 Report to undermine American jobs and innovation. Ending those practices is therefore a critical step towards reversing the damage such policies have had on the U.S. economy and restoring balance to the U.S.-China trade relationship. We hope that you will use these final weeks of negotiations to achieve a deal that makes substantial, verifiable, and enforceable progress to address these concerns.